Employee Incentive Programs: Everything You Need to Know

Cassy Aite
October 20, 2022
Employee Incentive Programs: Everything You Need to Know

Do your employees feel exhausted and disengaged? Do they appear less motivated than usual? Or may they're experiencing burnout, and their morale is low? 

Well, it's no surprise. 

75% of workers have experienced burnout at work for all kinds of reasons. While this seems common, the problem is it can lead to low productivity and high employee turnover rates if it's not nicked in time, ultimately harming your bottom line.

So how can your employees stay motivated and engaged? 

That's where a well-designed employee incentive program comes in. Incentives give your employees something to work towards and get tangible acknowledgment for their efforts. 

This guide will tell you everything you should know about building a strong employee incentive program, its benefits, different program ideas, and some companies to draw inspiration from.

What Is an Employee Incentive Program?

A woman smiling

An employee incentive program is purpose-built to encourage and motivate employees of an organization to work better and produce the desired output for the organization. It involves offering small tokens of recognition and appreciation for promoting positive workforce behavior and increasing employee success rates.

As an employer, you don't need to stick to only one kind of employee incentive program. You can offer monetary and non-monetary incentives based on employee productivity, revenue, and other standards that align with your company's goals.

Monetary Incentive Programs vs. Non-Monetary Incentive Programs

Both monetary and non-monetary incentives are essential. People work for money, so adding a form of monetary compensation to their take-home gives them a sense of achievement and security. 

It's equally true that workers love non-monetary incentives (think: travel rewards), as they are more memorable than cash payments. Therefore, combining both forms of incentives into your employee incentive program ideas is crucial. 

Here's a list of some monetary and non-monetary incentive programs you can initiate in your company:

Monetary Incentive Programs

  • Bonuses
  • Profit-sharing
  • Annual Incentives
  • Spot awards
  • Referral bonus
  • Project bonuses
  • Retirement fund contribution
  • Employee stock ownership plan (ESOP)

Non-monetary Incentive Programs

  • Personal growth and career development
  • Travel Incentives
  • Improved equipment
  • Employee recognition program
  • Gift cards 
  • Long weekends and vacations
  • Flexible work schedule
  • Staff care package
  • Video streaming services
  • Awards and prizes
  • Volunteering opportunities
  • Health and wellness benefits
  • Club memberships

Employee Incentive vs. Employee Benefits

Incentives and benefits may sound the same because they aim to strengthen employees' bond with the company. However, there are differences between the two. 

Incentives

  • Awarded after work completion subject to meeting specific targets 
  • Given to employees that stand out for their efficiency and productivity
  • Seek to motivate employees to give their best performance

Benefits:

  • Given the moment the employee joins the company
  • Offered to everyone equally regardless of work performance
  • Seek to attract and retain talents

Benefits are mandated as unpaid additions to an employee's salary. They include

healthcare, sick leave, paid time off, disability leave, and unemployment compensation. So note the differences when designing your employee incentive programs.

Do Employee Incentive Programs Work?

A woman and man standing side by side

Employee incentive programs work because they're rooted in human behavior. 

Science reveals positive rewards effectively reinforce the behavior, especially when given immediately after the desired behavior occurs. When you relate this to employee incentive programs, creating a direct link between goal behavior and positive outcome can boost motivation and cement the desired habits in employees.

Incentive programs when appropriately implemented can increase performance by an average of 22% and up to 44% for team incentives. Another study that was specifically designed to improve employee attendance saw the average percentage of attendance increase from 41% to 64%

Here are the differences between what happens when you offer incentives and when you don't:

Offer Incentives

  • Attract quality and talented professionals
  • Higher business growth in a short amount of time
  • Top talent retention due to employee loyalty
  • Gain sustainability faster

Don’t Offer Incentives

  • Attract mediocre, unmotivated candidates
  • Growth gets stagnant and later becomes nonexistent over time
  • Experience lack of employee loyalty leading to low retention of talents
  • Often struggle with bottomlines, even after operating for years

Cearly, designing and implementing a well-thought-out incentive program will keep your employees happy on the job and make them stick with you. But apart from that, there are more benefits of implementing a employee incentive program in your organization:

6 Benefits of Employee Incentive Programs

Offering incentives to your employees brings tremendous benefits. Your company should not go without one for these reasons:

1. Improves Productivity

Employee incentive programs assure employees that their hard work and dedication don't go unnoticed. It sets a standard that employees try to fulfill. And as they try to reach that standard to attain their personal goals, your business gains a productivity boost. 

2. Encourages Teamwork

A good incentive program creates an environment that fosters collaboration instead of competition between your employees. It encourages teams to work better together, promoting productivity in return. 

With this teamwork in place, your employees will feel more comfortable working with each other and impact the work environment positively.

3. Boosts Employee Morale

According to recent workplace stress statistics, employees are feeling increasingly burned out and depressed. But when they are satisfied with their work, they willingly put in their best effort to produce better results. The more they feel appreciated through incentive programs, the higher the impact on their morale and motivation. As a result, your business achieves success.

4. Improves Company Loyalty

Incentives are a great way to increase loyalty to a company. If you give employees what they want, they tend to stay with you. Celebrating employees' good work and commitment to the workplace increases employee retention and makes them work harder for your organization.

5. Reduces Employee Turnover

Employee behavior has shifted in recent years. With fewer incentives, young employees, especially, are less willing to remain at their jobs. Offering incentives like a flexible work schedule keeps employees satisfied, lowering employee turnover rates and retaining talented employees. 

6. Improves Engagement Rate

Rewards increase employee engagement by giving them a sense of belonging and visibility inside the organization. Offering particular incentives motivates workers and improves their connections with colleagues and customers.

20 Incentive Programs for Employees They Actually Want

A group of friends cheering on

Though incentive programs sound good, some may be difficult to use or simply don't matter to your employees. Therefore, it's crucial to give them the rewards they actually want. Consider the following employee incentive program ideas:

1. Bonus

Bonuses like performance bonuses are regularly scheduled cash that reflects employee success. They are a great way to track employee performance goals and reward the top performers when they contribute to the financial success and growth of the company.

There's another crucial bonus called the retention bonus. Companies give this financial compensation to employees who have remained with them for a specific length of time. Offering this incentive is an excellent way to keep your employees on board and ensure they don't leave your company.

2. Personal Growth and Career Development

Did you know that investing in your employees' professional development makes them stick with you for the long haul? 

Recent trends show that employees, especially the millennials and GenZs, want professional development even more than a steady paycheck. Offering this incentive tells them that you care about their personal growth, and your business, in turn, benefits from the new knowledge and experiences they have to share. 

Different ways you can engage your employees in personal growth and career development include:

  • Building learning and development programs (L&D)
  • Offering specialized training sessions
  • Subscribing to free online and eLearning services
  • Rewarding employees for completing their courses through a secondary incentive like an upgraded salary or a bonus package
  • Providing personal growth classes such as skydiving, yoga lessons, and guitar learning
Hoppier has partnerships with L&D platforms

You can also use Hoppier to offer your team learning and development opportunities from world-class professional learning platforms like Udacity and Udemy. 

Simply send a digital card over email with their learning stipend. Employees can then spend their allowance on a course of their choosing. Alternatively, you can also limit the options so they align with your brand and company culture.

Sign up with Hoppier to get started.

3. Profit-Sharing

Another way to motivate your employees to keep pushing those numbers up is profit sharing. When done right, it's a fantastic way to reward your employees for their contributions. 

Set aside a percentage of the net profits and split it among your employees. Ensure to consider an appropriate shareable percentage of incoming profits and have a company standard that increases annually or bi-annually.

This incentive style empowers the employees to see themselves as owners, not just as staff, ultimately encouraging them to focus on your company's long-term success.

4. Long Weekends and Vacations

Everybody likes a holiday or an extra day off. 

If your employees achieve their set goals, give them some hours off, the occasional Friday off, or buy them tickets for a much-needed vacation if your budget allows. This helps them maintain a work-life balance which significantly increases motivation. The more comfortable they become, the better they will perform at work.

5. Project Bonus

Rewarding your employees that spent weeks or months working on a big project encourages them to work similarly on the next project that comes their way. 

You can set a deadline that employees must meet to get a reward. For example, give a $500 bonus to everyone on a marketing account if they meet their deliverables and get client approval before the end of the week. 

This is a great tactic to encourage teamwork and camaraderie among team members and ensure they accomplish set goals.

6. Equipment to Work From Home

Man with a laptop using his credit card

Employees working remotely may incur extra costs to create a workspace for themselves at home. Wouldn't it be nice to lift that burden by providing them with work-from-home equipment? 

Provide a computer alongside a working desk and chair to fix any body aches that can negatively affect productivity. You can even do something extra, like paying for their internet connection. 

To make this plan work, 

  • Create a list of essentials to send to your remote workers apart from their working devices
  • Mail the list and ask them to choose what would make working from home comfortable for them
  • Get them what they need

7. Employee Stock Ownership Plan (ESOP)

This type of employee incentive gives employees an equity stake in the business. It's a well-known way of motivating employees because of its many benefits, like managing equity risk, boosting employee retention and employee satisfaction, and reducing turnover.

The National Center for Employee Ownership's research shows that companies with employee stock ownership plans grow 8%-11% faster each year. No wonder big companies like Disney and Walmart have ESOP up and running as an employee incentive program in their organization. 

8. Annual Incentives

Annual incentives can be merit-based raises tied to performance and are a great way to reward your employees for their hard work at the end of the year. 

Employees can also become eligible for annual incentives after meeting specific benchmarks. These raises can add up over time and give your employees a strong reason to stick with your company. Some examples of annual incentives are yearly living adjustment raises or a higher pay rate.

9. Retirement Fund Contribution

Offering to contribute to your employees' retirement plans in the form of a 401(k) plan and an employer match plan is a desirable incentive for your workers. Many people would love to retire early but don't have the savings or the means for it.

Retirement fund contributions not only benefit your employees but also help you attract and retain quality talent.

10. Spot Awards

Spot award or bonus is a cash reward given to employees in direct response to an achievement. It's a way to recognize employees for working on challenging projects or taking extra initiative to get the job done. 

This form of incentive is hugely effective and quick to execute — and can be monetary-based or point-based rewards. The point-based reward is simply accumulating points as awards over time which can be redeemed as cash.

11. Employee Recognition

Employee rewards and recognition is one of the most effective ways to show appreciation for employees who have been loyal to you for a long time. 

It's no news that the average employee can stay in a company for up to five years without feeling like they're part of the team. Also, more than 50% of employees say that recognition helps them feel seen and would be more effective in appreciating them than money. So this is a necessary incentive to keep the motivation ball rolling in your company.

12. Referral Bonus

Referral bonuses are cash rewards employees receive for connecting their employers with a candidate for an open position. 

Employees feel motivated and take their time to find the right fit for the job, not only for the reward but also because their reputation is on the line. If you offer referral bonuses, you tend to attract better employees since the referees would be personally invested in the success of the referred persons.

13. Flexible Work Schedule

Flexibility with when and where your employees work is one of the best ways to help relieve stress. Whether in remote or hybrid work, being flexible about work hours helps your employees feel in control of their own schedule. 

While a flexible work schedule is a great incentive, ensure to keep some guidelines at hand for coordinating and effectively executing tasks. Consider these flexible schedule examples:

  • Creating weekly plans for remote employees
  • Rotating shifts for hybrid work
  • 9-hour shifts Monday to Thursday and 4-hour shifts on Friday
  • Four 10-hour days

14. Gift Cards

Gift cards are one of the coolest ways to reward your employees. They provide a personal and specialized touch while allowing your employees to choose the gifts they really want. 

Plus, you don't need a particular period to send out gift cards. You can hand out gift cards to your employees whenever you like and even base them on their preferences, such as a music subscription, restaurant, and bookstore.

When it comes to gift cards, nobody does it better than Hoppier. 

Hpper's virtual cards are perfect alternatives to traditional gifts cards

Just pick a virtual gift card that is within your dollar limit and take advantage of Hoppier's partnerships with global vendors like Starbucks and Dunkin’ (for fresh morning coffee and snacks) and IKEA and Amazon (for their WFH setups). Easily send bulk gift cards at the touch of a button using Hoppier.

15. Staff Care Package

Staff care packages are sweet and simple, but they go a long way in making your employees feel recognized and keeping them healthy and happy. 

They help boost your employees' morale, showing them you care about their health and well-being. For your remote team, you can send some work-from-home essentials like a home office starter pack, scented candles, healthy snacks, etc. Other employee care packages include picnic crates and yoga & spa gift boxes. 

16. Health and Wellness Benefits

Who wouldn't love to work with a company that prioritizes employees' health? Wellness incentives are vital if you want your employees to perform at their peak. Some remote employees, especially, don't plan to take any time off to decompress. So offering this incentive prevents burnout and promotes physical and mental health.

You can do this by:

  • Sending free remote lunches
  • Hiring health experts for on-site health screenings
  • Offering discounts for mental and physical health rejuvenation check-ups
  • Setting up online counseling or yoga classes during work hours
  • Rewarding employees who hit wellness milestones like completing some minutes of activity per day

17. Awards and Prizes

You can boost employee morale and satisfaction by giving awards like 'Top Performer of the Year, 'Employee of the Month,' and so on. This form of public recognition tells your employees that you're grateful for their work and informs others of their accomplishments. It reinforces your company's values and motivates others to improve their performance as well.

18. Video Streaming Services

Offering streaming subscriptions like Netflix or Amazon prime video to your employees is one less financial strain they have to worry about. Everyone loves to wind down with a movie or two, so this is a necessary incentive to consider.

You can make it more fun by offering company-wide screenings of popular TV shows and movies. Or documentaries and informative content that provides skill and personal growth. Not only will your employees be entertained, but it will also foster communication and encourage team building.

19. Volunteering Opportunities

Allowing your staff to volunteer for a good cause is a great way to benefit them and your community. Some people enjoy giving back to their local community through volunteer activities or charitable organizations.

As a company, you can organize volunteer opportunities as a team activity or allow individual employees to take a day off that is convenient for them. This encourages meaningful bonding with your employees and is also vital to the growth and development of your company.

20. Club Membership

If you're looking to foster employee engagement within your organization, improve the quality of the time they spend away from work.This is a great way to contribute towards their work-life balance and give them something more to talk about instead of just work.

Some ways to do this include:

  • Starting a book-sharing club for employees that have a passion for the written word
  • Obtaining corporate memberships in sports, gaming, or entertainment clubs
  • Proving gym, yoga, or pilates memberships
  • Enrolling employees in other specific groups related to their interests and hobbies

How to Budget for Your Employee Incentive Program

Now that you know the benefits of an employee recognition program and different employee incentive program ideas you can implement, the next question is how you should budget for it. The answer depends on what you hope to achieve from the incentive program.

Things to consider when budgeting include

  • Your overall goals
  • The set incentive budget allocated within your company, if you have one
  • The total number of employees in your company, and 
  • How the employees like to be rewarded. 

SHRM recommends a budget of 1% or more of the total payroll. However, other factors influence your final budget considerations:

  • Administrative Time: Setting up and running a proper employee incentive program takes up much time from the administrative and HR departments. It is no easy task to ensure your employees are appropriately rewarded and recognized for their hard work. So keep this in mind while budgeting.
  • Programs to prioritize: You can decide which programs to prioritize depending on your goals. The costs of the programs vary based on your choices. For example, some programs that require team activity can have many transactions at a low cost per transaction.
  • Taxes: Some reward programs are exempt from taxes. Others are not. So it's essential to consult a tax adviser when planning an incentive program. Also, beware of other hidden costs such as sales tax, set-up charges, technology fees, and shipping & handling costs.

Note that the key benefit of your incentive program is employee engagement. So it's essential to consider this as you plan your budgets.

Employee Incentive Program Best Practices

Man and woman standing side by side

After deciding on the employee incentive programs you want for your company, you need to implement them correctly. The following are best practices you can apply:

1. Define Your Goals and Objectives

To begin, you must understand why an employee incentive program is crucial for you. It could be improving your customer service, boosting the productivity of your employees in increasing your company sales. Defining your objectives helps you choose the right incentive program to benefit your business.

2. Make Your Programs Inclusive

Before settling on an incentive idea, identify various incentive programs that all employees can access. You can also involve them in the selection process by sending out a survey of incentive ideas and asking them to add their own if none of the ideas fit. 

From the results, you can get an idea of what motivates them the most. This will guide you when choosing the right incentive programs and making your plans effective, as your employees will be more aware of their needs.

3. Keep Your Budget in Mind

Awarding your employees with expensive incentives like bonuses or paid vacations can boost their morale significantly, but it can also be problematic for you when you realize you can't afford such an incentive in the long run. A good idea is to align your incentives with your company's profits and determine how much you're willing to invest in incentive packages.

4. Pick the Right Incentive Program Provider

There are many incentive companies to choose from, but it's critical to settle for the right one for your company. The right incentive provider can become an asset in helping you develop incentive plans that align with your organizational objectives. 

To find out if your incentive program provider measures up, ask questions like:

  • Which incentive ideas will work best for me?
  • What features can your incentive program offer?
  • How will you help me track and measure the performance of my employee incentive program?

Knowing what you need and asking for it makes you more likely to choose the right incentive company for you.

Not to toot our own horn, but Hoppier can be your company's unfair advantage. It lets you send virtual credit cards out to your team members ahead, so they get something they genuinely need and want — wherever they are. Not only will this make your employee incentive program more personalized, but it's also super convenient and time-saving.

Hoppier has partnerships with thousands of global vendors

In just a few minutes you can set up a program, personalize your experience, and send virtual credit cards to your staff. Choose the card colors, add your corporate logo, and give your program a catchy name. What's more, you also get full control over the spending balance for each card (and when it can be spent), with any unspent funds returning to you upon expiry.

5. Measure the Impact of Your Program

After launching your employee incentive program, it's necessary to know its impact on the employees' productivity, performance, and business goals. 

Here are some ways to gain insight into your incentive program's overall impact:

  • Get feedback from your employees using by sending out pulse surveys or hosting one-on-one meetings
  • Make the feedback process as open as possible so employees can share with you freely
  • Implement the changes you feel are necessary based on the feedback you get
  • Use performance tracking tools to track employee productivity after program implementation
  • Conduct performance reviews and praise employees for exceptional performance.

Employee Incentive Program Mistakes to Avoid

When done right, employee incentive programs can take your company to the next level. However, it's easy to make mistakes when designing your program. 

Some common incentive program mistakes you should look out for include:

  • Infrequent rewarding
  • Rewarding only performance
  • Leaving some people out
  • Irrelevant and unclear criteria for getting rewards
  • Having only yearly awards
  • Using a one-size fits all approach
  • Not making recognition visible

Real-Life Examples of Companies With Seriously Cool Employee Incentive Programs

How about some real-life companies to draw employee incentive inspiration from? Here are four of the coolest ones:

1. HP Inc

HP Inc was a part of Hewlett Packard Enterprises (HPE) till they split and went small. 

During the pandemic, the company redesigned its employee incentive program to include virtual Saturday dance parties, cooking classes from star chef Michelin, home learning support, and financial bonuses. It also rewards all employees who report at least ten hours of volunteer work per quarter with paid volunteer time, employee discounts, and paid vacations.

2. Apple

Apple has always ranked high when it comes to workplace experiences. It understands and recognizes the entire workforce's efforts are integral to its success. 

The company has a stellar employee recognition strategy that includes offering a three-day paid holiday instead of the usual one-day off on Thanksgiving. In addition, Apple customized this particular reward based on the employee's location and job role. Employees located in different countries would also get the same paid time off on a similar holiday. 

Cool, right? 

3. HubSpot

HubSpot has a comprehensive list of incentives to cater to various employee preferences, which includes unlimited holidays, flexible work schedules, well-being initiatives, and tuition reimbursements for even university degrees. 

The company also went as far as supporting parents and future parents with generous parental leave and assistance with the financial cost of freezing eggs.

4. Microsoft

It's no surprise that Microsoft is one of the companies with the coolest employee incentive programs. 

Recently, the company was recognized for its contribution and commitment to creating a healthy environment, community, and workforce. Some of its incentives include childcare, health coverage, and an extensive network of social clubs.

Employee Incentive Programs in Summary

Creating an employee incentive program is a win-win strategy. It benefits your business as you reap the rewards of increased engagement and productivity. In the same vein, it helps your employees as they get to feel recognized and rewarded for all the effort they put in. 

Now that you know everything about an employee incentive program, go ahead and implement one for your organization. If you're wondering how to start, consider using an employee incentive platform like Hoppier to easily manage and measure the success of your employee incentive program—and offer incentives your employees genuinely care about.

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